Jung HYUNG-SUK

The Korean government had such a strong desire to recover and normalise the relationship with Iran that it made the huge decision to sign this agreement.

JUNG Hyun-suk General Manager DAEWOO E&C

Future focus on Iran

April 10, 2018

Jung Hyun-Suk, general manager for Iran at Daewoo E&C, talks to TOGY about the company’s historical and current activities in Iran, the impact of Korea Eximbank’s USD 8-billion loan agreement for Iran and plans for partnering with local companies. Established in 1973, Daewoo E&C specialises in the construction of plants, oil and gas facilities and infrastructure.

• On Korea Eximbank’s EUR 8-billion deal: “The outcome of this is very positive for Iran and for all of us. I believe we are quite close to creating feasible financial structures and, even though there are specific prerequisites for financing of every contract, theoretically projects in which Korean companies have stakes will be facilitated from Korean Eximbank’s side.”

• On returning to Iran: “We reopened our office in October 2015, hoping that the sanctions would be lifted soon after. Since then, we have pursued several projects, one of which is the Jask Refinery, formerly called Bahman Geno. We are also pursuing a couple of private power plant projects, which we are preparing feasibility studies for.”

Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Jung Hyun-Suk below.

Click here to read more

How has Daewoo been active in Iran and what have been its operational highlights?
Daewoo has been present in Iran since the 1980s. We undertook a few projects up until the late 1990s. Some were in the power sector, such as a small simple-cycle power plant in the Khuzestan province, and others were related to heavy civil work for the Bandar Abbas railway project, where we did three sections of the railway, crossing the Zagros Mountains.
Furthermore, we did a rehabilitation project for the Kharg Oil Terminal. So, despite the fact that we had to close our office in 2006 because of the sanctions from the US, we have been present in the market for at least 30 years.

When did Daewoo reopen its office in Iran and what projects have you taken on since then?
We reopened our office in October 2015, hoping that the sanctions would be lifted soon after. Since then, we have pursued several projects, one of which is the Jask Refinery, formerly called Bahman Geno. We are also pursuing a couple of private power plant projects, which we are preparing feasibility studies for.
There are many projects in infrastructure, oil and gas, and other energy sectors, but due to some difficulties in creating a feasible financial structure up until this time, the number of projects Daewoo has pursued post-sanctions has been limited. We don’t want to have projects we cannot guarantee the execution of.

 

In August 2017, Korea Eximbank signed a EUR 8-billion loan agreement for financing projects in infrastructure, energy and petrochemicals. How do you assess this milestone for Iran’s finance and South Korean companies?
To be honest, I didn’t expect that KEXIM would be the first ECA [export credit agency] to sign such a framework agreement with Iran, considering the relationship between the Korean and US governments. As you know, South Korea is quite dependent on the US for trade, defence and so on. However, the Korean government had such a strong desire to recover and normalise the relationship with Iran that it made the huge decision to sign this agreement.
The outcome of this is very positive for Iran and for all of us. I believe we are quite close to creating feasible financial structures and, even though there are specific prerequisites for financing of every contract, theoretically projects in which Korean companies have stakes will be facilitated from Korean Eximbank’s side.
I believe that other ECAs will find it easier to finalise their negotiations with CBI [Central Bank of Iran] for framework agreements because they now have a reference. The recent decision from the Korean government shows that Korean companies are more eager and ready to participate in the Iranian market and projects.

How is Daewoo tackling Iran’s opening market and the rapid growth of petrochemicals?
Iran has a huge feedstock for the petrochemical industry. Considering the efficiency and the profitability of the oil and gas industry, developing the petrochemical sector is very important for the Iranian government.
Daewoo E&C has good experience in the upstream and midstream, refineries and central processing units, and has relatively limited experience in petrochemicals. So, our strategy for that sector is to co-operate with experienced engineering companies. We are negotiating with some well-known engineering companies and are trying to develop some medium or small projects in this country. We are still in the early stages, however, and it’s difficult to disclose any information.

How is Daewoo involved in the transfer of knowledge and know-how to Iranian companies?
Over the last 44 years, Daewoo E&C has done more than 100 projects all over the world, through which we have been able to accumulate good knowledge in construction management. Construction, especially in big EPC projects, is not just physical construction. It needs planning and co-ordination between the procurement, the engineering and the construction activities.
So, our intention in this market is to have a partner that can do the actual construction work while we handle the engineering, foreign procurement and construction management. Through a partnership with a local construction company, I believe we can transfer this knowledge and know-how about how to manage mega-projects to save on construction time and cost.

Do you already have a local partner?
We are generally open for negotiation and co-operation with locals. There are some companies we have established a good relationship with since even before the sanctions, such as Jahanpars. In the power sector, we signed an MoU for co-operation with Hirbodan Company. It’s not that we will only work with them, but we know how they operate and that gives us confidence. Nonetheless, any other company that has sufficient capabilities and willingness to co-operate with us is welcome for a discussion.

What is your vision for the coming years?
We are interested in all of the sectors of the Iranian construction market, whether in oil and gas, power, or infrastructure and building – the same as the KEXIM agreement’s targeted industries.
We don’t really have a priority project.
The first requirement is financing. We will have to pursue a project where feasible means of financing are available. That means projects with sovereign guarantees or any other type of guarantees accepted by the lender. Then, of course, we will choose a project for which we have the most experience such as upstream and midstream oil and gas, heavy civil work and power generation. These three sectors will be our main focus for the future.

For more information on Daewoo E&C, see our business intelligence platform,TOGYiN.
TOGYiN features profiles on companies and institutions active in Iran’s oil and gas industry, and provides access to all our coverage and content, including our interviews with key players and industry leaders.
TOGY’s teams enjoy unparalleled boardroom access in 35 markets worldwide. TOGYiN members benefit from full access to that network, where they can directly connect with thousands of their peers.

Business intelligence and networking for executives: TOGYiN

Stay Informed